If the price level increases by 0.2 percent for every $100 billion increase in the money supply, by how much might prices rise if the Fed increases total reserves by $80 billion and the reserve requirement is 0.05?

Increase in price level = 3.2%

Explanation:

Given:

Price level increases = 0.2

Reserves = $80 billion

Reserve requirement =0.05?

Computation:

Increase in money = Increase in reserves / Reserve ratio

Increase in money = $80 billion / 0.05

Increase in money = 1,600  

And

Increase in price level = (Increase in money / 100) x 0.2%

Increase in price level = (1,600 / 100) x 0.2%

Increase in price level = 3.2%

answer; swot analysis;

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.